Imperial Holdings Expects Loss in First Profit Drop (Update1)
Imperial Holdings Expects Loss in First Profit Drop (Update1)
By Vernon Wessels
Jan. 24 (Bloomberg) — Imperial Holdings Ltd., owner of
South Africa;s largest auto dealership, said it will post a
fiscal first-half loss, the first time earnings have declined
since the company started trading 20 years ago.
Imperial will report a loss of between 2 rand and 3 rand a
share, the Johannesburg-based company said in a stock-exchange
statement today, without saying when it will report earnings.
The company said Dec. 13 that earnings in the six months
through December may range from a profit of 1.50 rand a share to
a loss of 3 rand a share because of the unprofitable sale of its
aviation unit and the cost of closing its commercial-vehicle and
distribution unit.
Chief Executive Officer Hubert Brody, who took over from the
company;s late founder Bill Lynch in July, is implementing a
strategy set by his predecessor to dispose of businesses Imperial
helped start. Imperial, which sells brands including Toyota, BMW
and Volkswagen, will focus on car retailing and imports,
financial services, logistics and auto rental.
Imperial;s shares have dropped 49 percent over the past 12
months for a market value 20 billion rand ($2.9 billion). Of the
five analysts that rate the stock, four have “hold;;
recommendations and the other a “sell.;;
Moody;s Negative Outlook
Moody;s Investors Service cut Imperial;s credit rating on
Dec. 14 to Baa2 from Baa1 and maintained a negative outlook,
indicating another downgrade is possible. Failure to complete the
sale of assets in the early part of this year may place further
pressure on the ratings, Moody;s said.
Imperial;s focus on car dealerships comes as the highest
South African interest rates in four years, and a law to obliging
lenders to ensure that consumers aren;t over-indebted, reduce
demand for autos. Vehicle sales fell 5.2 percent last year, the
first decline in five years, as record gasoline costs also curbed
spending, the Pretoria-based National Association of Automobile
Manufacturers of South Africa said Jan. 9.
The company is still in exclusive talks on the sale of its
South African aviation businesses and has reached a non-binding
agreement for the disposal of its Safair and Safair Lease Finance
units, Imperial said today. Payment for the sale of its Air
Contractors division in Ireland is being withheld until the
transaction is completed, the company added.
Imperial is still investigating “various alternatives;; for
disposing of its leasing and capital equipment division, while
“good progress;; has been made with the sale of its 66 percent
stake in Tourvest Investment Corp., Africa;s biggest package-tour
operator, the company added.
To contact the reporter on this story:
Vernon Wessels in Johannesburg at
